NAB has been given another 4
weeks to complete investigations against marked HUBCO officials

From Shamim Ahmed
Rizvi, IslamabadJan 03 - 16, 2000

The Chief Executive, Gen. Pervez Musharraf, in his televised speech on
Dec. 15, announced that he had given 4 weeks to WAPDA and other concerned authorities to
resolve the long standing row with independent power producers (IPPs) specially with the
Hub Power Company (HUBCO) which was harming national interests. Despite this categorical
instructions of the Chief Executive there is no sign of the resolution of these issues
even after the lapse of 2 weeks out of 4 weeks time limit.

Immediately after the General's speech the Ministry of Water and Power
made some swift moves and it appeared that the bitter row between the government of
Pakistan (GoP) and HUBCO may finally be resolved. It extended yet another invitation to
HUBCO to resume stalled negotiations to settle 17 month old dispute that has poisoned
investment climate in Pakistan. In a letter to HUBCO Chairman WAPDA confirmed the present
government's willingness to settle the matter on top priority basis. While asking for date
and venue for resumption of talks WAPDA also inquired HUBCO Chairman whether his company
plans to proceed any further on the court cases against WAPDA before the Supreme Court and
High Courts of Sindh and Lahore while recommended negotiations go on.

HUBCO, however, insisted that no talks on tariff reduction can proceed
unless the charges of corruption against the company and its officials were dropped.
According to reports the National Accountability Bureau (NAB) has been asked to look into
the files and proceedings on corruption charges against HUBCO carried out by its
predecessor under the guidance of its former Chief Senator Saifur Rehman, NAB has been
asked to conclude its findings within the minimum possible time not exceeding 4 weeks.

The row between the government of Pakistan and HUBCO began in May 1998
when Ehtesab Bureau started investigations into alleged corruption charges against HUBCO.
The dispute gained its present intensity after Wapda registered on September 3,1998 two
FIRs (first information report) that led to investigation by police and a full-fledged
criminal trial against the Chief Executive of the company along with its entire Board of
Directors. The dispute has continued to grow more and more complex ever since, despite
over a dozen attempts by the Mian Nawaz Government to arrive at a negotiated settlement
with HUBCO. Hubco has consistently maintained that it finds its officers to be unable to
continue negotiations with the government of Pakistan under threat of arrest on account of
pendency of the criminal cases against its chief executive and the entire board of
directors.

The last round of talks between Hubco and a two-man committee of the
government of Pakistan ended abruptly in August last. The government attempted several
contacts with HUBCO after the August talks, but the company never gave a date for
negotiations with former Finance Minister Ishaq Dar.

The Government of Pakistan has expressed at various meetings with the
World Bank, Asian Development Bank and the IMF its willingness to start negotiations with
Hubco at the earliest. World Bank and IMF are presently withholding disbursements to power
sector related projects in Pakistan due to the government's inability to find solution to
an issue that affects the World Bank's interests directly.

Failure of the Pakistan government to resolve the row between Wapda and
Hubco over the last 17 months has hit the country's investment climate making the country
look almost like an unpredictable bully among states vying for foreign capital.

The government virtually led independent power producers to their
financial demise on the basis of corruption charges which have yet to be proved.

Former Chairman of the then Ehtesab Bureau senator Saifur Rehman who
was obsessed with ideas of corruption particularly with reference to earlier ousted
Benazir Government, launched a massive and michevious operations including FIA raids on
company offices and cases its officials as he was keen to prove corruption charges.
However, the multipronged effort, including year long FIA probe, punctuated by the
induction of an audit firm of repute, failed to produce the desired results. The whole
operation was turned into an exercise in futility. Worse still, the procrastination in the
settlement of the key issue of disputed tariff has left Wapda burdened with an accumulated
outstanding of Rs. 9 billion in payment to Hubco. This is beside the extremely adverse
effect on the foreign investors in Pakistan, as part of the overall impact of the row with
the other IPPs.

Viewed in this perspective, any further lingering of the tariff
dispute, will appear wide off the mark in so far as the new government's anxiety to pull
the country out of the prevailing stagnancy through an all out revival effort. It will be
noted that Hubco's presence, as a power giant in this country, was basically owed to our
anxiety for taking care of the acute energy crisis that had continued to menace its
balanced economic progress. And there can be no denying the fact that its presence here
has proved instrumental in bringing about a sharp increase in foreign investment, with
particular reference to the energy sector, in Pakistan. It is, however, intriguing to note
that all the effort that has gone in that direction has seen it unfortunately turn into a
jinxed sector, blocking further investment, reversing the process and stifling progress.

Now NAB has been given another 4 weeks to complete investigations
against marked HUBCO officials. From the past experience one can see it as another
exercise in futility. In any case, however, NAB must finalise its report within the
stipulated time to help in resolving the issue at the earliest.